Well done to dealers - NADA

The year-on-year improvement in new vehicle sales in June was remarkable.

Mark Dommisse NADA National Chairperson

This is particularly true given that production is still suspended at the passenger car and light commercial vehicle manufacturing plant of long-time market leader Toyota South Africa Motors (TSAM), says the National Automobile Dealers’ Association (NADA).

NADA chairperson, Mark Dommisse, says the South African new-vehicle market continued to astound industry commentators and perform against the odds in June.

Aggregate domestic new vehicle sales increased by 7.6% to 41 019 units last month from the 38 131 vehicles sold in June 2021.

“What is remarkable is that this improvement was achieved with Toyota, the long-time market leader, only being able to retail about half its usual volume as its passenger and light commercial vehicle manufacturing plant is still not operating after flood damage experienced in the middle of April,” Dommisse says.

Toyota reported only 7 439 units sales in June compared to more than 15 000 in March, but the industry was able to more than make up for this loss in volume, he added.

Dommisse says the dealer retail channel had a stellar month and accounted for 34 935 or 85.2% of total sales.

“Overall, our dealers should be proud of their performance in June,” he says.

Total sales of passenger cars in June improved year-on-year by 20.6% to 29 545 units from the 24 497 new cars sold in June 2021.

However, sales of new light commercial vehicles, bakkies and mini-buses declined by 20.8% to 8 877 units last month from the 11 206 units sold during June 2021.

Nedbank’s group economic unit says the market is still in the red compared to pre-pandemic sales levels, with local new vehicle sales still down by 10.8% compared to the 2017 to 2019 June average and 10.7% lower than June 2019 levels.

Nedbank says the main drag stemmed from commercial vehicles, specifically light commercials.

Dommisse says the easing of COVID-19 restrictions on incoming tourists will buoy consumer confidence and the vehicle rental market.

The vehicle rental industry accounted for an estimated 8.6% of overall new sales, and 11.2% of new passenger car sales in June.

The financial health of consumers and its impact on new vehicle sales are becoming an increasing concern.

Dommisse says the ongoing increases in fuel and electricity prices are putting strain on consumer budgets, including both private individuals and companies, which will be aggravated by a possible further interest rate hike in July.

“The effect of inflation and higher interest rates will in all likelihood have an impact on vehicle sales over the next two months,” he says.

Dommisse added that the buying down trend is continuing apace, which is evident from the strong performance of Suzuki in the market and the fact its model line-up falls into the small vehicle category.

“The categories for smaller cars, SUVs and crossovers are gaining new entrants virtually every month, which means buyers are generally able to strike favourable deals in such a competitive market,” he says.

Looking ahead, Nedbank’s group economic unit says many downside risks still persist because the ongoing war in Ukraine is keeping commodity prices high and exacerbating supply-chain issues.

It added that elevated inflation will pressure household finances as the rising costs of essentials, such as food and fuel, erode consumers' purchasing power, resulting in reduced demand for big-ticket items.

“Furthermore, central banks around the world are tightening monetary policies, which is expected to further strain consumers.

“The above-mentioned factors are visible in declining business and consumer confidence indicators in key export markets, which may negatively impact volumes.

“However, the introduction of new vehicle models is expected to provide some support over the second half of the year,” it says.

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